When I think of Mickey Mouse and Sleeping Beauty’s Castle, I think of Disney. And when I think of Disney, being Dutch, I think of Disneyland Paris. Two parks, Disneyland Park and Walt Disney Studios Park, a Disney Village and seven hotels, all part of Euro Disney SCA. On the seventh of October this year, it has been announced that Walt Disney will help Euro Disney in times of financial distress. And Euro Disney is certainly going to need the help: visitor numbers are decreasing and losses are booked. Already in the first semester of 2014, a loss of 100 million euro was evident. The number of visitors declined this year with 700.000 visitors while already having lost a million visitors the previous year.
Now, by giving a helping hand, Walt Disney will create extra capital for Euro Disney by issuing rights worth €420 million and €600 million euro worth of debt will be converted into equity. Next to that, certain loan payments Euro Disney needs to make to Walt Disney will be deferred until 2024. It is not the first time Walt Disney (40% owner of Euro Disney SCA) helps the French park: a loan worth 1.3 billion euro was already issued in 2012.
But why are there financial difficulties for Disneyland Paris? According to the French trade union CFDT, who is representing the interests of the 15.000 French Disney employees, a deficit automatically arises because of the royalties the French enterprise has to pay to its mother company Walt Disney. However, since this is not a problem for other Disneyland theme parks, we have to look further for causes of this negative financial situation.
Decreasing Visitor Numbers
As already mentioned, the number of visitors has decreased dramatically in the last two years. While still having a yearly visitor number of 14.9 million (more than the Eiffel Tower and the Louvre combined!), the loss in visitors is leading to a loss in revenue. You could of course think that the financially difficult times for most of the European countries have something to do with this loss, which is also the card played by Euro Disney’s board. However, a lot of other European parks are actually experiencing increasing visitor numbers! When looking at a top 20 list for most visited theme parks in Europe, only 6 of them saw fewer visitors in 2013 compared to 2012. Remarkable is that, besides a decrease experienced by Dutch theme park De Efteling (-1.2%) and by the Spanish Port Aventura (-4%), the other four parks where visitors stayed away were French. The two Disneyland Paris parks (-6.9%), Parc Astérix (-6%), and Futuroscope (-15.4%).
Value for Your Money
Perhaps it is something about the French theme parks losing its appeal to theme park visitors, perhaps not. What we do know is that Disneyland has exorbitant ticket prices, too high for most European families. Comparing ticket prices with the number two in the top 20 list, Europa-Park in Germany, ticket prices for Disneyland are almost double the prices asked in Germany! Where Disneyland has an adult price of €65 for 1 park and €80 for two, Europa-Park only asks €41 for an adult ticket! This extreme difference in price could have been the reason that French families are massively choosing Europa-Park, now with 1.3 million French visitors visiting the German park in 2013.
When thinking of getting value for your money, the prices for the Disneyland parks outweigh the quality the visitors receive. There has been a petition last year signed by 5000 people complaining about the quality experienced in the parks. Food was pre-cooked, rides were often closed caused by breakdowns, and stage shows were not present. Overall the parks felt ‘dated’ to most of the visitors. Pierre-Yves Gerbeau, who led Euro Disney until the late 1990s, said that the park’s management had fallen asleep, failing to keep up with technical innovations and consumers’ diverging interests. A proper shake up both in leadership and strategy is needed according to Gerbeau.
A needed “shake up”: Changes, Renovations and Investments
The cash that will be made available with this intervention by Walt Disney will indeed be used for that so-called ‘shake up’. Current CFO of Euro Disney, Mark Stead, announced that the money will be spent on “revamping attractions, bringing in new ride technology and new ride experiences. […] We wanted to do that in the past, but we haven’t had the financial flexibility to do so.”
And this will be necessary. I have visited Disneyland and one of its hotels myself during the last weekend of October. While I must admit that I’m quite a Disney fan, I cannot deny that certain attractions and rides do tend to feel a bit ‘old’. For this reason, I am certainly looking forward to the new ideas and renovations that will be put in place. In my view, they have already started the renovation process, as some hotels, shops, restaurants and rides are under construction at this very moment.
Although the current financial injection should not only be used for renovation of buildings; it should also be used to come up with a more efficient plan to deal with waiting cues in restaurants. In every restaurant I visited, I couldn’t help but feel irritated when personnel who were apparently busy talking to each other and cleaning the same desk over and over again, did not jump in to help the poor one employee who clearly was under tremendous stress because of the line of more than 10 hungry visitors waiting to order. Something should definitely change on that matter.
It should be mentioned though that Disneyland Paris has done terrifically in introducing the new dark ride Ratatouille. A wonderful 4D experience, opened in July, which is expected to boost sales this year of €32 million. This will not be sufficient, however, to end the financial trouble.
When you wish upon a star…
When Euro Disney succeeds to update the parks, introduce a more efficient personnel strategy concerning restaurants, and lower their prices (I know, it almost sounds impossible), I have no doubt that Disneyland Paris will be successful for many more years to come. They should at least try to renew the parks without increasing their prices to increase the value for money. We don’t know what the future holds, but to quote a well-known Disney song: “When you wish upon a star. […] Anything your heart desires will come to you.”